The Spanish hotel group AC Hotels and Marriott International have reached a preliminary agreement to form a joint venture that will manage and franchise a new lodging cobrand across Europe and Latin America – 'AC by Marriott'.

The new co-brand will combine the strengths of AC Hotels and Marriott International. "AC by Marriott" will incorporate the concept and business model of AC Hotels' urban-style four-star hotel product, characterized by a unique blend of quality, comfort, design and technology, with Marriott International's global systems, distribution, and sales platforms, particularly Marriott Rewards, one of the world's largest hospitality loyalty programs with 33 million members.

The combination will permit Marriott's customers access under the Marriott Rewards program to a portfolio of Spain's leading business and urban-leisure hotels, enable AC's guests to earn Marriott Rewards points for travel at Marriott branded hotels around the world, and provide both companies with a platform for future growth.

"AC by Marriott" will focus on becoming a market leader in Europe and Latin America in the urban, four-star hotel category. At the launch of the joint venture, more than ninety (90) existing AC hotels in Spain, Italy and Portugal are expected to be re-branded "AC by Marriott" and enter into long term management or franchise agreements with the joint venture. The hotels will continue to be owned by affiliates of AC Hotels and other third parties.

Future hotels would be added to the portfolio under both management contracts and franchise agreements. The joint venture will be led by Antonio Catalán and his current team from AC Hotels headquarters in Madrid, with support on key functions from Marriott's team in Europe, headed by Marriott's European President Amy McPherson.

Formation of the joint venture is subject to negotiation of definitive transaction documents and customary closing conditions for transactions of this type, including obtaining any necessary consent. The parties anticipate closing in calendar year 2010, with the new AC by Marriott brand to launch in 2011.

Deloitte Corporate Finance in Madrid is acting as the leading financial advisor to both parties in this transaction.